The federal housing agency (HUD) just changed the way they intend to issue grants to prevent homelessness. The changes are big, and they’ll affect how Arizona communities are able to prevent homelessness and house people with serious mental illness.
In the past, most HUD housing money was renewed automatically each year using local plans. Under the new rules, only about 30% of the funding will be renewed with the remaining 70% up for competitive awards based on new criteria that HUD is prioritizing (e.g. funds will be preferentially directed to states with criminal penalties for urban camping).
Communities with strict camping bans, written partnerships with police, and programs that require people to take part in treatment will now have a competitive advantage for grant awards over those communities that don’t have those things.
HUD is also setting a limit on how much money can go toward long-lasting housing (permanent supported housing) … the type of housing that’s important for people with serious mental illness who often need stable housing and supportive services for many years.
The new rules push communities to prioritize their plans to focus on short-term housing with tight rules and required treatment programs.
Arnold v Sarn Legislative Report 2025
Arizona counties play a role in housing folks with a serious mental illness and they’re now under the gun to come up with plans that match what HUD is looking for or go without the federal funds.
For example, Maricopa County relies heavily on long-term housing. The county’s Continuum of Care includes more than 170 housing programs and more than 15,000 beds. They’ll need to rethink that focus or risk losing up to 70% of their current funding. Many other counties are in the same position.
If HUD funding drops or shifts away from long-term housing (as envisioned by the new HUD rules), Maricopa County could lose up to 1,388 units and about $32M. This would make it much harder for people with serious mental illness to find stable places to live.
Losing long-term housing puts people at great risk. Without a stable home, it’s harder to take medications on time, see doctors, or stay connected to support services. This leads to more mental health crises, more emergency room visits, and more time spent in jail.
Arizona counties and communities now face a stark choice. They can try to match HUD’s new expectations by focusing more on short-term programs, strict rules, and law-enforcement partnerships or roll the dice and risk losing most of their housing funds.
Note: AzPHA Policymaker of the Year awardee Attorney General Kris Mayes (with other Attorneys General) filed a multistate lawsuit accusing the HUD of illegally changing its Continuum of Care housing grant program. The suit argues that HUD is cutting protections for long-term housing by slashing the portion of automatically renewed funding and imposing new conditions like mandatory treatment participation and local anti-camping enforcement—without congressional approval.
The plaintiffs contend these changes will reduce access to permanent housing, destabilize populations with serious mental illness and chronic homelessness, and violate the “Housing First” model. They characterize the policy shift as arbitrary and capricious.








